First Mover Americas: Bitcoin Slips Below $30K as Inflation Hits New Four-Decade High

Good morning, and welcome to First Mover. I’m Bradley Keoun, here to take you through the latest in crypto markets, news and insights. (Lyllah Ledesma is off.)

• Price point: Bitcoin fell below $30,000 after May inflation unexpectedly rose to 8.6%, Helene Braun reports.
• Market Moves: Some crypto traders are still getting wiped out – "rekt" as it were – from margin calls on Terra-related tokens, including luna classic (LUNC) as well as the newly issued LUNA replacement tokens, Shaurya Malwa reports.

Price Point

By Helene Braun

The consumer price index (CPI), the most widely tracked benchmark for inflation, rose 8.6% on a year-over-year basis in May, topping expectations that it would decline to 8.2% from April's 8.3%. The core CPI – which strips out food and energy costs – rose 6% year-over-year in May, dipping from April's 6.2%, but more than expectations for a 5.9% increase.

On a monthly basis, the CPI rose 1% in May, ahead of expectations for a gain of 0.7%, and more than tripling April's 0.3% advance. The core rate rose 0.6% in May, flat from April, but higher than expectations for an 0.5% increase.

The unexpected fresh four-decade high of 8.6% in headline inflation is problematic for monetary policymakers who are in the middle of a rate hike cycle, but may have been eyeing a pause at some point later this year. Now the question may be whether the Federal Reserve needs to raise rates by 75 basis points per meeting, rather than the planned 50 basis points.

Bitcoin (BTC) – which along with nearly all assets has taken a major hit as central banks in Western countries have begun tightening monetary policy over the past few months – dipped to $29,500 from $30,000 in the minutes after the report. It remains off by about 65% from its all-time high hit last November.

Link to full story: Inflation Unexpectedly Reaccelerated to 8.6% in May, Hitting a Fresh Four-Decade High

Market moves

Terra’s Luna, Luna Classic Tokens See Volatile Trading Amid New Developments - by Shaurya Malwa

Tokens related to the Terra ecosystem saw volatile trading in the past 24 hours amid legal developments against issuing company Terraform Labs, data shows.

The price of luna (LUNA) gained as much as 30% from $2.65 on Thursday to $3.44 on Friday morning, and then fell steeply even as the broader crypto market remained flat. Luna classic (LUNC) gained as much as 34% before sliding Friday morning, data from CoinGecko shows.

Such volatility arose amid reports of the U.S. Securities and Exchange Commission investigating whether Terraform Labs violated U.S. laws regarding how it marketed its tokens.

Futures tracking the two tokens saw nearly $18 million in liquidations while losses on futures of other major cryptos apart from bitcoin and ether remained under the $3 million mark.

The LUNA was issued to holders in late May following the depeg of algorithmic stablecoin terraUSD (UST) in early May – a move that saw the value of old Luna (now rebranded as LUNC) fall as much as 99.7%. Value locked on decentralized finance (DeFi) apps in the Terra ecosystem fell by $28 billion in addition, as reported.

The liquidations marked the highest losses for traders of the new LUNA tokens so far, data shows, with nearly $5 million in losses. LUNC futures, however, saw higher losses at over $12 million, suggesting retail traders continue to prefer LUNC trading over LUNA.

Link to full story: Terra’s Luna, Luna Classic Tokens See Volatile Trading Amid New Developments

Latest Headlines

• Circle Agrees to Buy Web 3 Infrastructure Platform Cybavo Circle will invest in research and development related to Cybavo whilst leveraging its development services.
• Hop Protocol Airdrops Over 20M Governance Tokens The Hop Protocol airdrop is currently worth around $3.5 million with 37% of users claiming their tokens.
• Terra’s Luna, Luna Classic Tokens See Volatile Trading Amid New Developments Futures tracking the two tokens racked up nearly $18 million in liquidations over the past day in a higher-than-usual move.
• Digital Payments Firm Flexa to Buy Drop Party to Engage With Customers Drop Party uses merchandise drops to connect brands and consumers.
• Dragonfly’s Haseeb Qureshi Is Still Optimistic in the Crypto Bear Market Crypto’s most successful projects have historically been built during downcycles.
• Osmosis to Cover Possible $5M Exploit Loss; Chain to Remain Halted for 2 Days The cause of the liquidity pool exploit has been identified and a new blockchain update will be pushed in at least 48 hours.
• Fidelity’s Abigail Johnson Reaffirms Crypto Commitment in Bear Market “This is my third crypto winter," the U.S. brokerage CEO said at Consensus 2022, looking back on the firm’s trailblazing journey into digital assets.
• Grayscale, Bitwise Confident a Spot Bitcoin ETF Will Be Approved Soon Bitwise’s chief investment officer, Matt Hougan, pointed to a progression of approval decisions by the SEC that “ends in a spot bitcoin ETF.”

Today’s newsletter was edited by Bradley Keoun and produced by Parikshit Mishra and Stephen Alpher.